Copyright ©2011 by Cengage Learning. All rights reserved 1 Chapter 17 Managing Information Designed & Prepared by B-books, Ltd. MGMT3 Chuck Williams

Copyright ©2011 by Cengage Learning. All rights reserved 2 Moore’s Law Source: “Moore’s Law: Overviews,” © Intel Corporation, available online at [accessed 10 September 2008]. Reprinted with permission of Intel Corporation.

Copyright ©2011 by Cengage Learning. All rights reserved 3 Why Information Matters After reading these sections, you should be able to: 1.explain the strategic importance of information. 2.describe the characteristics of useful information (i.e., its value and costs).

Copyright ©2011 by Cengage Learning. All rights reserved 4 Data versus Information Raw data = facts + figures Information = useful data that influences choices

Copyright ©2011 by Cengage Learning. All rights reserved 5 Biz Flix: The Good Shepherd Take Two Video Click Beyond the Book Which parts of this scene show data? Which parts of this scene show information?

Copyright ©2011 by Cengage Learning. All rights reserved 6 Strategic Importance of Information First-Mover Advantage Sustaining a Competitive Advantage 1 1

Copyright ©2011 by Cengage Learning. All rights reserved 7 First-Mover Advantage The strategic advantage that companies earn by being the first to use new information technology to substantially lower costs or to make a product or service different from that of competitors 1.1

Copyright ©2011 by Cengage Learning. All rights reserved 8 Fast Facts on First Movers First movers earn a 30% market share. Later movers earn a 19% share. Of market leaders, a whopping 70% were first movers. ON AVERAGE:

Copyright ©2011 by Cengage Learning. All rights reserved 9 Sustaining a Competitive Advantage Competitive Disadvantage Competitive Parity Sustained Competitive Advantage Temporary Competitive Advantage Is it difficult for another firm to create or buy the IT? NOYES Does the information technology (IT) create value? NOYES Is the IT different across competing firms? NOYES 1.2

Copyright ©2011 by Cengage Learning. All rights reserved 10 Accurate Complete Relevant Timely Characteristics of Useful Information 2 2 © Richard Naude/Alamy

Copyright ©2011 by Cengage Learning. All rights reserved 11 Costs of Useful Information Acquisition Processing Storage Retrieval Communication Costs 2 2

Copyright ©2011 by Cengage Learning. All rights reserved 12 Getting and Sharing Information After reading these sections, you should be able to: 3.explain the basics of capturing, processing, and protecting information. 4.describe how companies can access and share information and knowledge.

Copyright ©2011 by Cengage Learning. All rights reserved 13 Capturing InformationElectronicElectronic ManualManual Bar Codes Radio Frequency Identification Tags Electronic Scanners Optical Character Recognition 3.1 © iStockphoto.com

Copyright ©2011 by Cengage Learning. All rights reserved Uses for RFID tracking computer equipment security access for employees EZpass on toll roads instant credit card payments cell phone SIM cards shipping labels preventing shrinkage tracking files collecting data on meeting participants customer loyalty cards (instead of a stamp) Source: “10 Business Uses for RFID,” Inc., available online at business-uses-for-rfid.html/

Copyright ©2011 by Cengage Learning. All rights reserved 15 Beyond the Book RFID in Action While RFID technology has not yet gained traction in all areas of U.S. retail, it has proven beneficial in managing size complexities and out-of-stocks on certain items. American Apparel has achieved 94 percent stock accuracy when using RFID and has saved about 168 man-hours per month. At Nine West, sales clerks can use a handheld device to check whether a certain size of an item is in stock before going back to pick it up, which improves the conversion rate. Source: C. T. Corcoran, “RFID: Will Fizzle Turn to Sizzle?”, Women’s Wear Daily, 19 August

Copyright ©2011 by Cengage Learning. All rights reserved 16 Processing Information: Data Mining Supervised Data Mining Data Warehouse Unsupervised Data Mining Data Clusters Sequence Patterns Predictive Patterns Affinity Patterns 3.2

Copyright ©2011 by Cengage Learning. All rights reserved 17 Beyond the Book SEC Uses Data Mining With the recent insider trading scandal of Galleon Management founder Raj Rajaratnam, the Securities and Exchange Commission is finding success with new techniques. Informants and wire-taps were used extensively in the Galleon case. It is also using the Center for Enterprise Modernization to comb through the large quantities of tips it gets and create new digital tools to use in data analysis. The agency has used data-mining from the Financial Industry Regulatory Authority (FINRA) extensively to look for suspicious activities in trade records. The SEC is also looking increasingly toward cooperation and information sharing with other agencies such as the U.S. Attorney’s office. Source: R. Farzad and T. Francis, “The SEC: To Catch a Cheat”, Business Week, 2 November

Copyright ©2011 by Cengage Learning. All rights reserved 18 Beyond the Book Data Mining and HRM An emerging trend is using data mining in human resource management. Data miners can track the digital footprints of workers, and use these records to measure behaviors and productivity. They can create profiles of employees who are most likely to leave, and compare them to current employees. Currently only about 1% or 2% of large corporations are estimated to be using these methods. Tech companies like IBM, Microsoft, and Oracle have been at the forefront. Source: S. Baker, “How Much Is That Worker Worth?”, Business Week, 23 & 30 March

Copyright ©2011 by Cengage Learning. All rights reserved 19 Unsupervised Data Mining Data Clusters Sequence Patterns Predictive Patterns Affinity Patterns Three or more database elements occur together One of the elements precedes the other Helps identify database elements that are different Two or more database elements occur together significantly 3.2

Copyright ©2011 by Cengage Learning. All rights reserved 20 Protecting Information  Authentication  Authorization  Two-factor authentication  Firewalls  Antivirus software  Data encryption  Virtual private networks  Secure Sockets Layer (SSL) encryption 3.3

Copyright ©2011 by Cengage Learning. All rights reserved 21 Beyond the Book Higher Education Lagging in Privacy Matters While chief privacy officers have become common in the corporate world, few colleges have instituted these positions despite the amount of sensitive information they manage. Many institutions claim that existing information-technology security officers are sufficient. But while IT security officers may be sufficient to protect data that has already been collected, some argue that they aren’t always prepared to ask or answer the question of whether that data should have been collected and stored at all. Source: L. Guernsey, “A Wealth of Data, and Nobody in Charge,” The Chronicle of Higher Education 55, no. 13 (21 November 2009). A1.

Copyright ©2011 by Cengage Learning. All rights reserved 22 Accessing and Sharing Information and Knowledge Internal Access and Information Sharing Internal Access and Information Sharing External Access and Information Sharing Sharing of Knowledge and Expertise 4 4

Copyright ©2011 by Cengage Learning. All rights reserved 23 Executive Information System (EIS) Uses internal and external data Used to monitor and analyze organizational performance Must provide accurate, complete, relevant, and timely information to managers 4.1

Copyright ©2011 by Cengage Learning. All rights reserved 24 Characteristics of Best-Selling EIS Few commands to learn Important views saved 3-D charts Geographic dimensions Identification of Problems and Exceptions Ease of Use Analysis of Information Compare to standards Trigger exceptions Drill down Detect & alert newspaper Detect & alert robots Sales tracking Easy-to-understand displays Time periods 4.1

Copyright ©2011 by Cengage Learning. All rights reserved 25 Intranets Private company networks Allow employees to access, share, and publish information A firewall permits only authorized internal access 4.1

Copyright ©2011 by Cengage Learning. All rights reserved 26 Why Companies Use Intranets Let employees find information Enable collaboration and information sharing Automate business processes Reduce costs Provide secure, remote access to company data via the web Provide online training 4.1

Copyright ©2011 by Cengage Learning. All rights reserved 27 Corporate Portals A hybrid of executive information systems and intranets that allows managers and employees to use a Web browser to gain access to customized company information and to complete specialized transactions. 4.1

Copyright ©2011 by Cengage Learning. All rights reserved 28 External Access and Sharing Electronic Data Interchange Extranets Web Services Internet 4.2

Copyright ©2011 by Cengage Learning. All rights reserved 29 Benefits of External Access and Sharing Increased productivity Reduced data entry errors Improved customer service Faster communications Reduced costs 4.2

Copyright ©2011 by Cengage Learning. All rights reserved 30 Electronic Data Interchange (EDI) Electronic Data Interchange Electronic Data Interchange When two companies convert their purchase and ordering information to a standardized format to enable the direct electronic transmission of that information from one company’s computer system to the other company’s computer system. 4.2

Copyright ©2011 by Cengage Learning. All rights reserved 31 Web Services Using standardized protocols to describe and transfer data from one company in such a way that those data can automatically be read, understood, transcribed, and processed by different computer systems in another company. 4.2

Copyright ©2011 by Cengage Learning. All rights reserved 32 Extranet Networks that allow companies to exchange information and conduct transactions with outsiders by providing them direct, Web-based access to authorized parts of a company’s intranet or information system. 4.2

Copyright ©2011 by Cengage Learning. All rights reserved 33 Sharing Knowledge and Expertise Decision Support System Decision Support System Helps managers to understand specific kinds of problems and potential solutions, and to analyze the impact of different decision options using “what if” scenarios. Expert System Expert System An information system that contains the specialized knowledge and decision rules used by experts and experienced decision makers so that nonexperts can draw on this knowledge base to make decisions. 4.3